Jordan Keys & Jessamy, LLP v. St. Paul Fire and Marine Insurance Co.

Appeal from the Superior Court of the District of Columbia (CA-7779-02). (Hon. Zoe Bush, Trial Judge).

Before Schwelb and Ruiz, Associate Judges, and Belson, Senior Judge.

The opinion of the court was delivered by: Schwelb, Associate Judge

Argued January 19, 2005

The question presented in this case is whether an insurance carrier (St. Paul Fire and Marine Insurance Company, hereinafter St. Paul or the carrier) is obligated to pay the plaintiff law firm (Jordan Keys & Jessamy, LLP, hereinafter Jordan Keys) for legal services performed by Jordan Keys on behalf of St. Paul's insured, Greater Southeast Community Hospital (the Hospital) in a medical malpractice suit. Although no express contract existed between Jordan Keys and St. Paul, Jordan Keys claimed in the trial court, and continues to contend on appeal, that it is entitled to recover on a theory that there was an "implied-in-fact" contract between the parties. In the alternative, Jordan Keys asserts that St. Paul has been unjustly enriched and that Jordan Keys has a right to recover in quantum meruit on a quasi contract theory.*fn1

The trial court dismissed Jordan Keys' complaint, as amended, for failure to state a claim upon which relief may be granted. We affirm.

I. THE AMENDED COMPLAINT

In its amended complaint, Jordan Keys alleged that the firm was retained by the Hospital to defend it in an action for medical malpractice based on brain injuries said to have been suffered by Kharee Thompson, the minor child of Steven A. Thompson and Tonya Thompson. Jordan Keys further alleged that it provided services to the Hospital, which included numerous [c]court appearances, engaging in lengthy, complicated discovery, identifying and interviewing medical experts, defending the matter through mediation, and expending over three hundred attorney and paralegal hours. In addition, plaintiff incurred expenses on [the Hospital's] behalf in preparing the case for trial. Plaintiff did not receive full payment for services rendered and expenses paid.

At the time Jordan Keys provided its services, the Hospital was self-insured for the first $1,000,000 of liability. St. Paul provided excess coverage with a policy limit of $4,000,000. Jordan Keys acknowledges that, under its retainer agreement, its fees were to be paid by the Hospital, not by the carrier. According to Jordan Keys, however, St. Paul directed and controlled the litigation, and required Jordan Keys to provide regular status reports, evaluations, and summaries of depositions, dispositive motions, and court proceedings. St. Paul required these reports because, in the event that Mr. and Mrs. Thompson were awarded more than $1,000,000, the carrier, through its "excess coverage" policy, would be required to pay any amount above $1,000,000, up to the $4,000,000 limit.

On May 27, 1999, the Hospital filed a petition for bankruptcy protection. As a result, the Thompsons' malpractice action against the Hospital was stayed by order of the Bankruptcy Court. According to Jordan Keys, the Hospital owed the law firm in excess of $67,000 in unpaid legal fees and costs.

In the spring of 2001, the plaintiffs in the Thompson case agreed to proceed solely against St. Paul's $4,000,000 excess insurance policy, and not to seek recovery from the Hospital for the first $1,000,000 in liability, for which the Hospital was self-insured. Based on that agreement, the Bankruptcy Court lifted the stay of the Thompson litigation. The Hospital then tendered its defense to its carrier. Upon taking charge of the litigation, St. Paul elected to replace Jordan Keys as defense counsel in the suit by the Thompsons.

The events that allegedly followed are described in paragraphs 17-20 of the amended complaint:

17. Defendant [St. Paul] directed plaintiff [Jordan Keys] to provide its legal files, including documents privileged as attorney work product, to the new law firm in order that such firm might prepare for the pretrial conference and defend the suit at trial. Plaintiff asserted a lien on the client files and refused to forward its work product to the newly-retained law firm without having its legal bill satisfied by Defendant, who intended to and did ultimately rely upon plaintiff's work product in defense of the litigation to its own benefit, i.e., to protect its policy of excess insurance.

18. In the face of plaintiff law firm's refusal to follow Defendant's instructions and surrender all files, [the Hospital] then successfully petitioned the Bankruptcy Court to order plaintiff law firm to release the files to [the Hospital] and turn over non-work product documents to new counsel for [the Hospital].*fn2 In accordance with the order of the Bankruptcy Court, plaintiff released files, depositions, expert reports and non-work product documents to the new law firm.

19. The documents, pleadings, depositions and all other work completed by plaintiff in preparing the defense of the Thompson litigation are currently being utilized and relied upon by the new law firm in the defense of the claim to the benefit of the insurer, Defendant St. Paul Fire and Marine Insurance Company.

20. Defendant has failed to pay plaintiff in full for the legal work and fees expended on behalf of the defense of [the Hospital], all of which were reasonable and incurred in the course of representing and ...

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